Davis Polk

Capital Markets

Our capital markets practice is ranked among the world’s best. Leading international corporations and the world’s largest financial institutions look to our lawyers for advice on securities offerings of all kinds around the world. We advise on the full range of capital markets transactions, including equity, investment-grade and high-yield debt and derivatives. We have substantial experience in the most complex securities offerings that require highly creative and sophisticated advice, such as novel equity derivative products and cross-border, multi-listed IPOs.

Our extensive experience with the U.S. Securities and Exchange Commission (SEC) provides clear insight into regulatory considerations in offerings of all types; this has frequently enabled us to obtain regulatory relief for our clients. Our leadership in capital markets has put us in the position to comment with significant impact on many important financial regulatory developments throughout history, from the inception of federal securities regulation in the 1930s through developments such as Rule 144A, Regulation S, Regulation M and Sarbanes-Oxley, and most recently the 2008 Emergency Economic Stimulus Act (EESA), Troubled Asset Repurchase Program (TARP) and the JOBS Act.

Recognition

Chambers Global – Debt and Equity Capital Markets: Band 1, one of only two firms worldwide to be ranked for both categories

Refinitiv (f/k/a Thomson Reuters) 1H 2019 – 1st in 21 Global and U.S. capital markets categories, more than any other firm

Bloomberg 1H 2019 – 1st in 16 Global and U.S. capital markets categories, more than any other firm

Notable Matters

Citizens Financial Group. We advised Citizens Financial Group on its $3.5 billion initial public offering and NYSE listing of common stock. We also advised The Royal Bank of Scotland Group on certain matters related to its separation from Citizens. This transaction was the largest U.S. bank IPO in history. This divestment of Citizens by RBSG, as a result of a £45 billion bailout by the U.K. government, raised very complex legal challenges. RBSG was accountable for Citizens even after it ceased to own all or even half of the company.

Markit Ltd. We advised Markit Ltd. on its $1.5 billion initial public offering and NASDAQ listing of common shares. This IPO was highly complicated from a corporate reorganization, corporate governance and deal management perspective. The reorganization at the time of the IPO included creating a new Bermuda holding company through a U.K. court-approved scheme of arrangement that required the approval of hundreds of shareholders. There were a record 15 joint book-running managers for the transaction, most of whom were also selling shareholders and many of the leading banks on Wall Street. As a result, there were extensive negotiations regarding ongoing shareholder rights and corporate governance issues, including unusually long transfer restrictions applicable to the larger shareholders.

Israel Chemicals. We advised Israel Chemicals on its $421 million initial public offering and NYSE listing of ordinary shares.This was the first-ever IPO that included not just an offering but also a forward sale agreement (effectively a hedge rather than true sale by the selling shareholder), with a portion of the shares being sold in the offering representing shares borrowed by the forward sale counterparty and sold by it, rather than the selling shareholder. Other offerings have involved this structure in reliance on certain no-action letters, but those no-action letters do not apply to an IPO and only permit this transaction by seasoned issuers. Davis Polk came up with a structure that would permit a forward sale agreement to occur in the context of an IPO, and permit subsequent changes to the hedge to be conducted in a manner not requiring SEC registration.

Fideicomiso Hipotecario (FHipo). We advised the initial purchasers on the offering by FHipo of trust certificates consisting of an initial public offering in Mexico and an international offering in the United States and other countries outside Mexico pursuant to Rule 144A and Regulation S. This first-of-a-kind transaction represented the first mortgage REIT ever sold internationally in Latin America. While REITs are a major asset class in the United States that are critical to the American economy, they are still new in Mexico. The FHipo mortgage REIT, a first-of-its-kind product in Mexico, marks the next major step in the development of the REIT-like asset class in the emerging markets. This complex deal not only resulted in the creation of a new asset class, but the establishment of an international secondary market for Latin American mortgages. Mexican commercial banks finance very few mortgages compared to developed markets. It is anticipated that this new vehicle will allow the Mexican government to advance many new mortgages and thereby foster home ownership by Mexico’s emerging middle class.

Windstream and Communication Sales & Leasing (CS&L). We advised on certain financing transactions related to the spinoff from Windstream Services of Windstream’s communication distribution systems into CS&L. This included advising the initial purchasers on a $1.5 billion Rule 144A/Regulation S offering of senior secured and senior notes by CS&L and its wholly owned subsidiary. In connection with the spinoff, we also advised the dealer managers in arranging a debt-for-debt exchange in which approximately $2.4 billion of debt outstanding under Windstream’s existing credit facilities was retired in exchange for the notes and for term loans incurred under CS&L’s term loan facility. CS&L is expected to elect and qualify for treatment as a real estate investment trust (REIT) under U.S. tax laws. CS&L is expected to be the first REIT focused on acquiring and building communication distribution systems, and will seek to grow its portfolio by pursuing opportunities to acquire additional communications distribution systems to lease to communication service providers on a triple-net basis.

Walgreens Boots Alliance. We advised the global coordinators on approximately $10 billion aggregate of investment-grade notes offerings by Walgreens Boots Alliance, consisting of euro-, British pound- and U.S.-dollar-denominated debt securities. Walgreens Boots Alliance used the net proceeds from the offerings to fund a portion of the cash consideration payable in connection with its completed acquisition of the remaining 55% equity interest in Alliance Boots GmbH that Walgreens did not already own, and to refinance substantially all of Alliance Boots’ existing borrowings. Immediately prior to the completion of the Alliance Boots transaction, Walgreens was reorganized into a holding company structure and became a wholly owned subsidiary of Walgreens Boots Alliance. The sheer size of the amount raised and the fact that the issuer would become the ultimate publicly traded parent following the reorganization raised novel structuring and sequencing considerations.